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 Market Mysteries of the week

  Why do Americans love fireworks?

Answer : Besides being sparkly and fun, they’re also a big moneymaker.How much money?Fireworks are big business. Americans spent more than $2 billion on fireworks alone last year. That’s about as much as we all spent on Christmas trees too. But it’s not just about the fireworks. Americans are expected to spend an extra $7.5 billion on food for the celebration - hot dogs, hamburgers, and beers a must. About 29% of people will spend money on patriotic items.Who’s making the money?Most of the fireworks businesses are smaller operations. US-based firework retailers and wholesalers, like American Pride, Broad Stripes, Bright Stars, and Uncle Sam's Answer import their fireworks from Chinese manufacturers at a lower price, then resell to local governments and customers with high margins.The local demonstrations are a boom for local economies and small businesses. San Deigo’s Big Bay Boom attracts over 500,000 viewers to its fireworks show each year. That single show generates over $18 million in direct and indirect sales for local hotels, restaurants, shops, and other businesses focused on the show. Local businesses and governments also paid $8 million of extra wages to staff working additional hours around the events. Add on to that $1 million in city tax revenues and $1 million in media coverage revenue and you’ve got yourself a big moneymaker for the local economy. Even this year?With vaccinations continuing to roll out and restrictions on gatherings lifting, people are ready to watch fireworks and plan cookouts to celebrate this July 4th. About 84% of Americans are planning to celebrate this year, up from the dip to 76% last year, and nearly back to the ~88% yearly average.But fireworks haven’t been immune to the pandemic-fueled supply shortages affecting so many industries this year. Fireworks don’t usually sell out each year, but last year, Americans depleted supplies on record firework demand. With the big demonstrations postponed, consumers purchased more fireworks to put on their own shows. Now, high demand, depleted supplies, and pandemic-disrupted transportation lines from China have led to a shortage of fireworks and surging prices.Can I make money somehow?Just sit back and enjoy the show. By now, it’s probably too late to beat the buyer rush. It’s also not very easy or profitable to invest in fireworks. It’s mostly run by a collection of smaller, private businesses, and investing in something that depends on a singular event or season for all of its annual revenue isn’t typically a good idea. Invest in your mental health and revel in the break from work this weekend.Markets are closed tomorrow, so we’ll be back on Tuesday with your regular Scoops. As always, please share the Scoop!Please feel free to forward this to anyone who might find this interesting.💙 The Scoop Team

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